Equinor and Petrobras to develop offshore wind farm in Brazil – May 23, 2022

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Equinor ASA (EQNR Free Report) teams up with Petrobras (ACB Free Report) to develop the Aracatu Wind Farm, an offshore wind project off the southeast coast of Brazil.

The Aracatu wind farm, located 20 kilometers off the Brazilian coast in the Campos Basin, will provide 4 gigawatts (GW) of offshore wind capacity. Equinor and Petrobras are currently evaluating the environmental feasibility of the project.

In 2018, Equinor signed a memorandum of understanding with Brazilian energy giant Petrobras to develop the offshore wind energy segment in Brazil. Notably, Equinor filed an application to begin the environmental clearance process for the Aracatu project two years ago.

Equinor has enlisted environmental explorations for six projects in four states in Brazil, with 14,370 megawatts currently under consideration. Aracatu is the largest offshore wind development Equinor is developing in the country. The remaining projects oscillate between 2 GW and 2.5 GW.

Equinor launched the Ibama license for the Aracatu project, comprising the Aracatu I and Aracatu II offshore wind farms. The wind farms are expected to generate enough energy to meet the needs of 2 million homes.

Brazil currently has 21 GW of wind capacity, which represents about 10% of the country’s total electricity production. The country has immense potential to be a global leader in the segment. The generation method aligns well with Petrobras’ expertise and capability in the marine environment, particularly in deep and ultra-deep waters.

Offshore wind farms are one of Petrobras’ green alternatives, along with the development and production of advanced biofuels. The company is also focused on the development of advanced biofuels, including jet fuel.

Company profile and price performance

Based in Stavanger, Norway, Equinor is one of the world’s leading integrated energy companies.

EQNR shares have outperformed the industry over the past six months. The stock gained 34% against industry growth of 33.8%.

Image source: Zacks Investment Research

Zacks Ranking and Other Stocks to Consider

Equinor currently boasts a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector could look to the following companies which also currently sport a Zacks #1 ranking. You can see the full list of today’s Zacks #1 Rank stocks here.

Marathon Oil Corporation (MRO Free Report) reported adjusted net earnings per share of $1.02 in the first quarter of 2022, beating Zacks’ consensus estimate of 98 cents. MRO net income was favorably impacted by stronger liquid realizations and strong domestic production.

Marathon Oil reduced its gross debt by $1.4 billion in 2021, comfortably covered by the year’s free cash flow of $2.2 billion. It’s also important to remember that the company’s major debt maturities mostly fall after 2025. There’s not a lot of near-term risk on that front.

Sunoco LP (SUN Free Report) reported first-quarter earnings of $2.32 per unit, comfortably beating Zacks’ consensus estimate of 89 cents. Strong quarterly earnings were driven by higher motor fuel and non-fuel fuel sales.

For 2022, Sunoco has revised its adjusted EBITDA guidance upward to $795-835 from the previously reported $770-810 million. In 2021, the metric was $754 million.

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